FFO excluding divestments, a measure of a property
company’s ability to generate cash, climbed 24 percent to 50
million euros ($64 million), the Berlin-based company said in a
statement today.

GSW, which only operates in Berlin, is benefiting from
rising demand for homes in the capital. Apartment rents have
gained about 8 percent in the past year and 26 percent in five
years, according to Berlin-based online broker
ImmobilienScout24.

“The situation on the Berlin housing market remains
positive and stable,” the company said in the statement. “We
are therefore confident of reaching the targets set for the 2012
financial year.”

Third-quarter net income dropped to 15.6 million euros, or
31 cents a share, from a restated 17 million euros, or 41 cents,
a year earlier, GSW said. The decline was mainly due to an 81
percent drop in interest income after a derivative sale boosted
the year-earlier figure. Net rental income increased 26 percent
to 42 million euros.

GSW fell 69 cents, or 2.3 percent, to 29.55 euros at the
5:30 p.m. close in Frankfurt, the lowest since Oct. 18. The
shares have gained about 34 percent this year, while the FTSE
EPRA/NAREIT’s index of German real estate has climbed 27
percent.

Acquisition Target

GSW is close to buying 3,000 apartments in Berlin,
according to a separate statement, The company owns 52,000 homes
in the city valued at about 2.9 billion euros and agreed to
acquire an additional 4,400 in October.

To help pay for the acquisitions, GSW will sell convertible
bonds valued at about 185 million euros, the company said. The
bonds will mature in November 2019. GSW raised 202 million euros
in a share sale in April.

The company repeated that 2012 FFO excluding sales will be
between 61 million to 64 million euros.